Why Are Housing Prices So High in the Bay Area?

Why Are Housing Prices So High in the Bay Area

Why Are Housing Prices So High in the Bay Area?

Living in decent, affordable and ideally located housing is one of the most important factors for every Bay Area resident. In addition to just basic shelter, housing affects our lives in significant ways, defining our access to education, work, shopping and recreation. The availability and affordability of houses also affect the state’s economy, impacting the way businesses hire and retain employees and influencing their choices about whether to expand, relocate or remain in San Francisco.

Unfortunately, the San Francisco Bay Area is home to some of the most expensive housing markets in the U.S. According to Investopedia, the average rent for an apartment runs at approximately $2,500 to $3,500 a month. The total cost of annual expenditures for a single person is predicted at $50,000 a year, excluding savings and discretionary necessities.

Because of this, many people choose to settle down outside of the Bay Area, preferring locations like Hayward or Fremont over places like San Francisco, Palo Alto or Mountain View, to avoid extreme housing prices.

But why are housing prices so high in the Bay Area? The reasons behind this are simple: lots of people want to live in the Bay Area, but it doesn’t have enough homes to accommodate all these people. While the area needs an estimated 200,000 units per year, it has been getting less than a third of that. The resulting shortage is a $150 billion annual strain on the state’s economy.

Impact on Locals and the Government

As a trade-off, residents prefer to live far away from the Bay Area and end up enduring long-distance commutes to the city. On average, workers in the Bay Area commute 10 percent more each day than commuters in other parts of the country, making it harder for companies to hire and retain employees. And this is also a primary reason why the San Francisco Bay Area suffers from the greatest homelessness of any state.

Local government adds to the shortage by introducing limits on house density, development and sometimes renting. This local drag to housing is fueled by a state fiscal system that encourages the local governments to lean towards retail development (which generates sales tax) instead of solving the crisis of housing.

More Housing Could Lead to More Revenue for the City

The goal should be simple: more housing. That means the Legislature should focus on the changes necessary to produce more housing. The Legislature should also take an all-inclusive approach to address the problem from various angles and revise policies that limit regulations on housing development.

However, much can be done to promote additional housing and drive down home prices and rent. But some factors such as the high demand to live in the Bay Area and natural limitations on space are beyond control for everyone. As such, home prices in the Bay Area will continue to be high in the foreseeable future, even if major reforms are put in place.

On the plus side, though, residents have access to the BART (Bay Area Rapid Transport) — the region’s leading public transportation. It is a well-developed, inexpensive and convenient way for people to save time and money. If you’re looking for an affordable place to live in the Bay Area, the outer suburbs would be an ideal option. The cost of living is low, there are better schools and residents enjoy an overall sense of peace.

Finding Affordable Housing Near East Bay the Easy Way

If you’re looking for affordable housing in the Bay Area, Marcotte Properties is here to help you! We have a selection of properties available to suit all your needs. For more information, please call us today at (510) 887-7581 or get in touch with us through our website’s contact page to learn more about our affordable apartments in the Bay Area.


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I have lived at Bart Plaza for 10 years. It is a nice, quiet, and clean place to live and the staff is very helpful.”

Kristen H.. , Bart Plaza Apartments